A change in the average price level is called ________, while a change in the price of a specific good in comparison with other goods and services is called ________.
A. inflation; a change in a relative price
B. a change in a relative price; inflation
C. a price level adjustment; a quality adjustment
D. a quality adjustment; a substitution bias
Answer: A
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The Taylor rule says that the ________, the lower the federal funds rate
A) higher the volume of bank reserves B) higher the inflation rate C) lower the output gap D) higher the supply of money
Once a cartel determines the profit-maximizing price
A) each firm faces the temptation to cheat by raising its price. B) each firm faces the temptation to cheat by lowering its price. C) changes in the output of any member firm will not affect the market price. D) entry into the industry by rival firms will not affect the profit of the cartel.
Give an example where individuals "vote with their feet" in choosing among bundles of public goods and tax rates
What will be an ideal response?
You own a tract of trees and are deciding whether to harvest them now or next year. If you harvest them now, you can invest the proceeds and get a return of 5% on your investment. What should you do?
a. Let the trees grow as long as their dollar worth increases by more than 5% b. Let the trees grow c. Cut down the trees, and sell them d. Let the trees grow as long as their dollar worth increases by less than 5%